European Banking System Collapsing Now! Next up, Sovereign Bonds?

Unequivocally, the rubber is hitting the road NOW! So much so, I believe “last to go” markets are in danger of being overwhelmed by the chaotically scrambling, Keystone Kop-like, terminally cancerous “powers that be.” And by “last to go,” I don’t just mean the gold and silver markets, which are being swamped by exploding physical demand, collapsing production, vanishing inventories, and history’s most violently PM-bullish political, economic, and monetary environment. No, I mean everything else; including hideously overvalued stock markets – which cumulatively, will either crash into oblivion, or hyper-inflate Zimbabwe style; with the result, in either case, being the biggest real losses of all time. To that end, kudos to Gordon Long, who in this article, opened my eyes to the massive head and shoulders top formation in global stock markets, which is breaking down as we speak; ominously, led by financials. Which is exactly why he – and I – anticipate Central banks are about to go “all in” on hyperinflation.

To that end, today’s Japanese fiscal stimulus announcement (following last week’s Bank of Japan pronouncement that it is doubling its stock market purchases); this morning’s Royal Bank of Australia rate cut; and next week’s imminent Bank of England rate cut and QE announcement; are just the tip of what will be history’s biggest monetary iceberg. Just under the surface – where as you know, the majority of icebergs lie – the Federal Reserve is lying in wait, praying it can avoid re-joining the overt QE ranks before the election. But irrespective of the timing, I assure you they will retake the mantle of lunatic, overt money printing and asset monetization from the ECB and BOJ before long. And when they do, there’s no telling if 2008-style crash or Weimar-like hyperinflation will win the day. Which, in either case, will yield a massive crash in the dollar’s value against real money, irrespective of how it performs against other collapsing fiat toilet paper.

Regarding Precious Metals, I have spent the past six months detailing the building evidence of a Cartel on the run – and recently, have flat out called for its ultimate demise, in countless articles and podcasts. For the past month – including yesterday’s article and SGT podcast – I have incessantly written of how silver’s 50 Month moving average, which was breached to the downside during April 2013’s “alternative currency destruction” Cartel attack, was about to be retaken. And when it does, at $20.46/oz, the massive “buy stops” sitting above it could cause a massive paper short squeeze, given that the Cartel has an all-time high naked short position. Which, in turn, could ignite the “historic silver shortage” I predicted two months ago; and with it, the imminent demise of the heinous gold Cartel.

Well, we’re up to $20.70oz as I write Tuesday morning; and once the Independence Day Eve high of roughly $21/oz is cleared, my guess is said “buy stops” will kick in en masse. In fact, with this week’s “Commitment of Traders” report cycle ending this afternoon, who knows how many additional shorts will be put on to prevent silver from going berserk – particularly as, per today’s title, the European Banking System is Collapsing. Which, when it is revealed in Friday’s COT report, could – in and of itself – catalyze said short squeeze. And by the way, on a day of yet another massive silver withdrawal from the COMEX’s remaining registered inventories occurred – taking total “supply” down to just $500 million – Craig Hemke put out an excellent article on just how transparent the COMEX paper fraud is becoming. Which I assure you, the world’s “big money” is well aware of, as it cumulatively realizes the game of “physical metal musical chairs” is nearing its end.

What will be the catalyst – of not just the gold Cartel’s, but the entire global financial system’s demise? Perhaps it’s the European political, economic, and monetary collapse staring us right in the face; starting with the Italian banking system, which is responding to the Monte Paschi “bailout” by collapsing to new, historic lows – highlighted by the implosion of Italy’s largest bank, Unicredit, whose stock is down 15% in the past two days. Or, equally likely, the world’s “most systematically dangerous” institution, Deutsche Bank – whose stock, as I speak, is within $0.10 of its all-time low, of $12.50/share, hit during the heart of the post-Brexit stock crash.

My friends, there is not a doubt in my mind that Deutsche Bank, the “Lehman of Europe,” is toast. And frankly, I’d be shocked if it’s accelerating collapse doesn’t require “official” intervention by year-end. Which I assure you, will NOT turn the tables – and more likely than not, will not only prove futile, but permanently destroy what’s left of Central banks. And no, I’m not saying that flippantly – as due to the horrific, criminal damage caused by Central bank policies; which a Deutsche Bank collapse would highlight front and center; I believe “Economic Mother Nature’s” armies will massively, and bloodily, rout the powers that be this time around. Which frankly, could be one of the ugliest political, economic, and social messes in global history.

That said, stocks are not even close to the world’s biggest bubble. Or even Chinese real estate. Or heck, the “anti-bubble” that is Precious Metal suppression. No, that honor would go to Western sovereign bonds – as discussed in June’s “when will the biggest bubble of all burst?”

To that end, yet another ridiculously dangerous “meme” is that rates can be taken indefinitely lower – even to deeply negative levels – if Central banks simply “QE to Infinity.” However, as I wrote in April’s “myth of QE to Infinity,” at some point Central banks run out of bonds to buy, as both the ECB and BOJ are learning as we speak. And oh yeah, if faith in the toilet paper currencies underlying them is lost, the “bond vigilantes” can, and will, overcome even the most powerful printing presses.

Which is why I find it so interesting that, amidst horrifying economic data like last week’s U.S. GDP and durable goods orders reports; miserable corporate earnings; collapsing oil prices; and a host of other “deflationary” economic data, U.S. Treasury yields have surged higher the past two days. This, with stocks under pressure, and Precious Metals rising sharply. Which frankly, is a combination of market movements I simply cannot remember – particularly as rates, for years, have only risen sharply when propaganda of an “improving economy” has circulated. Which I assure you, is not the case now.

And FYI, Japanese government bonds, or JGBs, have been hit hard in the past two days as well, despite the government’s latest “helicopter money” announcement. And heck, German Bunds, and all Western sovereign bonds, for the first time in my (very long) memory. Which certainly has caught my attention – as at some point, said “biggest bubble of all” has to burst. And frankly, now would be as good of a time as any.

That said, whether Western sovereign bonds collapse now or “later” is immaterial; as right NOW, the European banking system is imploding; whilst oil prices are collapsing, Precious Metals are surging, and the global political and social order is on the verge is turning chaotic. From my perspective, I care only about PROTECTING you from what’s coming. And hopefully, you’re viewing this ugly mosaic as I do – and shortly, the entire world will. And consequently, acting to position your financial assets appropriately.

7 Comments

Steven Swager
on August 2, 2016 at 12:39 pm

Thanks Andy! A clear and concise picture of how our real world is changing every day in spite of what the MSM propaganda ignores.

Mike
on August 2, 2016 at 3:54 pm

Reserve Bank of New Zealand almost guaranteed to cut OCR by 25 basis points next week (11th) and now odd are going up that they may cut by 50bp.

Ed_B
on August 2, 2016 at 6:58 pm

Two years ago, I started making comments on-line about the fact that the cartel has a terrible problem via the diminishing returns aspect of their naked paper shorting. They are continually having to write more naked short contracts that reduce the prices of gold and silver by smaller amounts that do not hold down the prices as long as they once did.

I believe that this is because there is massive buying of physical gold and silver from Asian buyers who swoop in every time the cartel tries this tactic and that buying bids the prices right back up again. The cartel is spinning its wheels and not getting anywhere. At some point, they will have to give up on this technique for managing gold and silver prices, which helps hold up their fiat currency prices, because it simply no longer pays for them to do so.

Like many others on-line these days, I hear the sound of Taps being played over the corpse of the cartel. I agree with Andy that it won’t be long in coming because the funeral procession is now forming up in both Japan and in the EU.

singlemalt
on August 2, 2016 at 11:07 pm

So Andy if everything collapses, what happens? Let us take a look a the wounded vets, most of them have no means to support themselves, so they get taken out with trash? Because now they have no benefits or pensions as USD and economy reaches zero. So what is the end plan for them?

Farrell
on August 3, 2016 at 1:24 am

Andy,

It’s not nice to say, but the banks have it coming to them for being an irresponsible casino!

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